Starting this week, home owners who are at least 90 days behind on their mortgage payments and have a Fannie Mae or Freddie Mac-backed mortgage may receive an offer from lenders to get their mortgage payments reduced. The program is part of the Streamlined Modification Initiative through the Federal Housing Finance Agency.
The program doesn’t require delinquent home owners to file any financial paperwork. They’ll just need to make the new mortgage payments for a three-month trial period. If successful, the modification then becomes permanent.
Lenders will reduce a monthly payment by either extending the term of the loan—such as from 30 to 40 years—or by reducing the interest rate.
For example, as CNNMoney reports, “modifying a 30-year, $200,000 loan with a 5.5 percent mortgage rate to a 40-year term with a 4 percent rate will reduce the monthly payment to $835 from $1,135—a $300 difference.”
FHFA, which oversees Fannie Mae and Freddie Mac, declined to comment on the precise number of home owners who will receive the principal write-downs. CNNMoney is reporting “hundreds of thousands.”
To qualify for the program, home owners must have a mortgage that is at least 12 months old and they can’t be more than 24 months behind on mortgage payments. Also, the home owner’s principal balance must be 80 percent or more of the value of their home.
The program will run until Aug. 1, 2015.
The author of this article is: realtormag.realtor.org
See the original post at: http://realtormag.realtor.org/daily-news/2013/07/01/lenders-begin-streamlined-modifications-week
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